A Strong Middle Class Blog

  • Vice President Biden Leads Discussion on Middle Class Families in D.C.

    On Thursday at the Center for American Progress in Washington D.C., Vice President Biden moderated an in-depth discussion focusing on the long-term, structural challenges facing middle class families in today’s economy. Joined by a panel of policy experts, the group focused on broader issues such as the overall labor market in recent decades; shifting gender roles and the need for work-life balance in today’s economy; economic inequality and mobility; the increased gap between productivity and wages, and much more. 

    Going forward, the Middle Class Task Force will continue working with these panelists, among other outside experts, developing policy ideas to help lift the living standards of working families.  As the Vice President put it Thursday: "That dynamic—where the economy’s moving forward as middle class families fall back—that just doesn’t work for the president, for me, and, certainly, for millions of families who are finding the system to be working against them, not for them."

    Check out the video below:

    Download Video: mp4 (45MB)

    Terrell McSweeny is Domestic Policy Advisor to the Vice President.

  • Vice President Biden Brings the MCTF Back to DC

    Vice President Joe Biden and the Middle Class Task Force have traveled all across the country to highlight and seek input on key initiatives aimed at restoring middle class prosperity. We’ve been to in Philadelphia, Pennsylvania and Denver, Colorado, talking about jobs in the green economy; Perrysburg, Ohio, discussing the future of manufacturing; and St. Louis, Missouri and Syracuse, New York, meeting with students and educators about college access and affordability.  Now, the Vice President is bringing the conversation back to our nation’s capital.

    On Thursday, November 5th, Vice President Biden will bring together a panel of experts to talk about the unique challenges facing middle class Americans in the 21st century economy. The panel will discuss how those challenges relate to changes to the overall labor market in recent decades; shifting gender roles and the need for work-life balance in today’s economy; economic inequality and mobility; the increased gap between productivity and wages; and much more. 

    Check back later this week to see how the discussion goes and for more information on the White House’s Middle Class Task Force, visit www.whitehouse.gov/StrongMiddleClass.

    Elizabeth Alexander is Press Secretary to the Vice President

  • Going Green - And Saving You Money

    Vice President Biden and the Middle Class Task Force just finished unveiling the Recovery Through Retrofit Report, at a public event inside the Eisenhower Executive Office Building. Joining the Vice President at the announcement were Nancy Sutley, Chair of the White House Council on Environmental Quality, Steven Chu, Secretary of Energy, Hilda Solis, Secretary of Labor, Shaun Donovan, Secretary of Housing and Urban Development and Karen Mills, Administrator of the Small Business Administration.

    Last May in Denver, CO the Vice President asked the White House Council of Environmental Quality (CEQ) to report back to the Middle Class Task Force with a plan to make sure that the unprecedented Recovery Act investments in energy efficiency and renewable energy lay the groundwork for a self-sustaining home energy efficiency retrofit industry -- which will create good, green jobs and save middle class families money on their energy bills. CEQ answered this call by bringing together eleven Departments and Agencies and six White House offices to develop today’s report.

    The report identifies three barriers that have prevented a national market for home retrofits from taking off. First, consumers don’t have access to reliable information about retrofits. Second, the upfront costs of home retrofits can be high but consumers don’t have access to financing. Finally, there aren’t enough skilled workers to serve a robust national retrofit market.

    Recovery Through Retrofit is an action plan to address these barriers without new money and by using authority the federal government already has.

    Here’s how we will take steps toward breaking down each barrier:

    1. To give consumers the information they need, the federal government will develop a standardized measure of home energy performance that is applicable to every home as well as a home performance label to signal that a home is energy efficient – like ENERGY STAR® does for appliances.
    2. We will make it easier for homeowners to pay for home retrofits by promoting accessible and affordable financing options.
    3. We will establish nationally recognized standards for worker training and certification so when you decide to invest in a home retrofit, you can rest assured that the work will be done right. 

     

    With almost 130 million homes in the United States, there’s plenty of work to be done.   Building a nationwide home retrofit market will create good jobs and reduce greenhouse gas emissions. Right now, homes generate more than 20 percent of our carbon dioxide emissions.

    Today’s announcement is just the beginning. The Agencies, Departments and White House offices involved with this report will continue their collaboration. An interagency Energy Retrofit Working Group will submit an implementation plan to the Vice President within thirty days. In the coming months, this group will keep track of the progress we are making on the report’s recommendations and report back to the Vice President on a regular basis.

    As the Vice President said this afternoon, "when we recover—and we will recover—we will come out of this a much stronger nation, better prepared to lead the world in the 21st Century as we did in the 20th."

    We’ll come out a little greener, too.

    Terrell McSweeny is Domestic Policy Adviser to the Vice President.

     

  • Retrofitting and the Middle Class

    With the leaves changing color, the air crisper, and the days shorter – fall is fully upon us (well, depending on where you live) - and many Americans are putting the heat back on in their homes.  In that spirit, the Vice President is holding a Middle Class Task Force event at the White House on Monday morning to unveil our "Recovery through Retrofit" report.

    The report offers a plan that builds on the Recovery Act’s unprecedented investments in energy efficiency to make it easier and more effective for middle class families to retrofit their homes – helping them save money and creating jobs, while reducing carbon emissions. It’s a plan agreed to by 11 different agencies and departments – which means the federal government will lead a coordinated effort to make American homes more energy efficient.

    So, be sure to check back in with us Monday to read the report and watch the event at WhiteHouse.gov/live.

    Terrell McSweeny is Domestic Policy Advisor to the Vice President.

  • "Let the Sunshine In"

    Here at the White House, those of us on team Recovery Act put a very high premium on transparency and accountability.  Like they say, "sunlight’s the best disinfectant," and when it comes to tracking the $787 billion economic stimulus plan, our view is that we should let the sunshine in. 

    Well, today, we’re happy to report that the independent Recovery Accountability and Transparency Board—they’re the folks who bring you www.Recovery.gov—has taken yet another step toward showing the American people their money at work.  The board released its very first report on the small portion of Recovery Act spending that recipients have reported on so far, and these preliminary data show that the Act is doing just what it’s supposed to do: helping to put Americans back to work, while partially offsetting the ongoing job market impact of the worst recession in decades.

    The RAT Board (sorry, but that’s the acronym) reported today that the first $16 billion of Recovery Act spending—that’s about 2% of that total Act—saved or created more than 30,000 jobs.   That’s $16 billion in direct jobs from contracts the Federal government has bid out to private-sector contractors. 

    Here, for example, are some of the projects and jobs recipients are telling us about:

    • In Stockton, California, the San Joaquin Regional Rail Commission reports that they’ve contracted for 125 workers to lay rail track and do signal work on the Union Pacific Railroad. 
    • Down in Florida, Hamilton Roofing, inc. reports that they have 40 roofers, sheet metal workers, and crane operators at work repairing the roof at the Cape Canaveral Air Force Station.
    • In South Plainfield, New Jersey, Sevenson Environmental Services, Inc. reports that they have 37 laborers and heavy equipment operators working at good union jobs, with living wages and health benefits, cleaning up a heavily polluted Superfund site.
    • At the Marine Corps Recruit Depot in San Diego, California, the Syska Hennessy Group reports that they’re employing 36 electricians, roofers, and other workers installing solar panels on the roof of 16 buildings at the base.

    Reports like these demonstrate a level of accountability never seen before in tracking a national project of this magnitude—we’re tracking Recovery Act spending down to the project, down to the job, down to the street address where the work was done.  The Board has really raised the bar here.

    Again, these are preliminary data—we’ve got a lot more data collection and analysis to do—but they point to a couple of positive outcomes.  First, if you extrapolate from this reporting to the bigger picture, this data appears to confirm that we’ve created or saved around one million jobs so far, which is just about what our own estimates and those of private sector forecasters have found using the types of methods our Council of Economic Advisors describes here

    Second, these reports cover only direct, tangible jobs created by recipients, which means there are even more jobs created when those folks go out and spend their new earnings—the so-called multiplier effect. 

    There’s a lot more of this kind of reporting to come.  The Board will be making a much more significant announcement, covering about 10 times as much money and including more different types of Recovery Act spending (like spending directly by the states), on October 30th.  With that release, we’ll be able to give you an even more detailed picture of the Recovery Act at work.  

    Jared Bernstein is Chief Economist to Vice President Biden, and Executive Director of the Middle Class Task Force

  • For Whom the (Trading) Bell Tolls: Reforming Wall St. to Protect Main St.

    In the heat of the debate about the need to fundamentally reform the way financial markets operate, both here in America and abroad, one crucially important point risks getting lost: the stakes for the middle class.
    Too often, debates like these end up with the regulators on one side and those whom they would regulate on the other. When the debate is focused on obscurities like over-the-counter derivatives and accounting standards, it becomes that much easier for the rest of us to tune out and let the vested interests fight it out among themselves.
    But when it comes to reforming our financial system, sitting this one out would be a big mistake. If we get this wrong, the damage will reverberate far beyond Wall Street.
    It's all too easy to see why failing to reform our financial system could be so devastating to the middle class. Just look around: the origins of this Great Recession were the unchecked excesses and reckless behavior in the financial industry, as easy money and flimsy underwriting gave rise to a massive housing bubble. When the bubble burst, the financial structure supporting this expansion turned out to be a house of cards, and as that house collapsed, the shock waves were felt not just on Wall Street, but around the world.
    So how exactly do these troubles in our financial system affect middle-class families? Lots of ways—and none of them good.
    Most immediately, there are tons of middle-class jobs associated with residential housing, from construction to furnishings to real estate, and many of these jobs have been lost. (Employment in residential construction and contracting, for example, is down one million jobs off of its peak). Next, most middle-class homeowners, for whom homes are their most valuable asset, have taken a big hit to their wealth, with home prices down over 30%.  The huge spike in foreclosures—another symptom of the bust—is a major contributing factor here: studies show that when a home is foreclosed, the price of nearby homes can fall as much as 9%.
    Then there's the impact of the credit crunch on business activity, on loans, and once again, on jobs. As much as it sometimes seems as if Wall Street and Main Street exist on different planets, they’re intimately connected.  Whether it's a loan for a home, a car, or a college education—or just credit for a small business to keep its shelves stocked—the credit freeze born of the collapse of the housing bubble is a chill that continues to be felt throughout this nation. What starts as a risky derivatives trade in the boardroom of a New York skyscraper can all too easily end up as a distressed conversation around the kitchen table in a middle-class home in Wisconsin.
    And there's another crucial piece of fallout from all of this bubble-driven speculation, one that has been particularly damaging to the middle class: financial bubbles are associated with income growth bypassing low- and middle-income families and accumulating at the very top of the income scale. Before the crash, in 2007, the wealthiest 1% of households received 23.5% of all income, the highest share on record going back to the early 1900s. But there was one ominous exception: 1928, the year before the crash that began the Great Depression, when 23.9% of the income went to the top 1%. That bubble didn’t end too well either, as you may have heard.
    And while the top was surfing the big wave, the middle class was treading water and the poor were drowning. Despite years of economic growth and solid productivity in the last economic expansion, the median income went nowhere and poverty rose.  Incredibly, according to Census Bureau data, real median household income in 2008 was about $1,000 lower—that's right, I said lower—than it was a decade before.
    For all of these reasons, President Obama is proposing the most significant overhaul of the financial system since the 1930s. From the perspective of middle-class families, the reforms we've proposed have a clear mission: to create and enforce common-sense rules of the road that will ensure we're not back here again a few years from now.
    For example, the Consumer Financial Protection Agency we've proposed would, if created, enforce fair rules to eliminate the misleading terms, hidden fees, and exploding interest rates that some banks use to pad their profit margins at the expense of ordinary Americans.
    This kind of abuse is a big problem for middle-class families. During the housing bubble, banks and mortgage lenders routinely drew families into mortgages they didn’t understand and couldn’t afford. Some of these mortgages looked affordable at first, but their interest rates skyrocketed after a few years; others gave homeowners the option of interest-only payments for the first few years, without mentioning that this "option" had a good chance of leaving the homeowner with an underwater and unaffordable mortgage a few years down the road.
    The Consumer Financial Protection Agency would also regulate the practice of charging exorbitant hidden fees on credit and debit cards. For years, rather than seeing genuinely transparent competition on price and service, we’ve seen banks seeking to profit from credit card lines by burying fees in the fine print. For example, banks will make $27 billion this year just from the overdraft fees they charge on debit cards. We want to stop the practice of charging misleading or abusive hidden fees so that consumers know what they’ll be paying and can choose the product that offers the best price and terms.
    Another key aspect of reform is to prevent what's come to be known as "systemic risk." One reason we ended up in the mess we're in is that financial institutions around the world became tightly linked, owing huge sums to each other in contracts built on massive amounts of debt and supported largely by the assumption that home prices could defy gravity forever.
    Those links meant that the failure of one financial institution could threaten the entire system. President Obama's reform plan puts regulation in place to oversee these linkages and to ensure that the financial system borrows and lends responsibly instead of relying on excessive leverage to take on huge risks in search of huge profits.
    Still, even with these safeguards, it's important to be prepared in case we once again find a major financial institution on the brink of collapse. In the aftermath of the Great Depression, we faced a similar problem: when one bank failed, there were runs on other banks, creating a destructive domino effect.  To deal with this problem, Congress created the Federal Deposit Insurance Corporation. And for years, the FDIC has successfully prevented bank runs by efficiently shutting down failed banks while guaranteeing that the customers' deposits (up to $250,000) will be safe even if the bank fails.
    But in the case of today’s big "non-bank" financial institutions, like Lehman Brothers or AIG, we don't have these same options. Our reform plan introduces a crucial new function that would let regulators safely shut down troubled financial institutions without endangering the financial system, a function called "resolution authority."  This proposal would help deal with the problem of financial institutions that are "too big to fail" by making sure that regulators can allow any institution to fail, but in a way that incurs minimal costs to taxpayers and doesn’t cripple the system.
    The President summed this all up eloquently: "Though they were not the cause of the crisis, American taxpayers through their government took extraordinary action to stabilize the financial industry. They shouldered the burden of the bailout and they are still bearing the burden of the fallout – in lost jobs, lost homes and lost opportunities."
    In other words, the debate over financial regulatory reform must not be an isolated debate solely involving regulators and traders. The outcome of these reforms must not be ceded to the lobbyists fighting for the status quo. These are kitchen table, wallet, pocketbook, and lunch-pail issues, directly linked to the prosperity of the middle class.
    Every day that stock markets open for trading on Wall Street, they ring the opening bell. Remember this: when it comes to financial regulatory reform, ask not for whom that bell tolls. It tolls for thee.
    Jared Bernstein is Chief Economist to Vice President Biden, and Executive Director of the Middle Class Task Force